Building a Business Plan (Years 8–11) — Financial Literacy

A business plan turns an idea into a clear plan by naming the problem, the customer, the costs, the price and the profit target.

It is the week before the school summer fair. You reckon you could sell warm, honest home-made lemonade — but how much lemon, how much sugar, how many cups, and what price? Guess wrong and you either run out or go home with a crate of leftovers. A one-page business plan is how you answer all of that before you spend a single pound.

Why this matters — A good idea is not a business. A business earns more than it spends, on purpose. Planning first means you find the mistakes on paper, where they cost nothing, instead of finding them at the stall with a box full of unsold cups.

Start with a problem and a customer

Every real business begins with a problem or need that someone will happily pay to solve. "I like drawing" is a hobby. "Parents at my mosque want modest, hand-drawn Eid cards and the shops do not sell them" is a business, because it names a customer — a specific person with a specific need. Ask yourself: who exactly is this for, and why would they choose me?

An idea becomes a business when it solves a real problem for a named customer.

Work out your costs

Costs come in two useful splits. Start-up costs are paid once to get going (a jug, a folding table). Running costs are paid again and again as you trade (lemons, cups). Running costs split further: fixed costs stay the same however much you sell (the £5 table hire), while variable costs grow with each unit you make (each cup of lemonade needs its own lemon and sugar).

Cost	Type	Amount
Jug and sign	Start-up (once)	£6.00
Table hire for the day	Fixed running	£5.00
Lemons, sugar, cup (each drink)	Variable running	£0.30 each

Price to cover costs and make a fair profit

Your price must cover the variable cost of that unit and chip in towards the fixed costs, with a fair profit left over. Trade honestly — no misleading claims, and a price that is fair to your customer. Aiming at 40 cups, the £5 table works out at 12.5p per cup. Add the 30p ingredients and each cup costs about 42.5p to make. Charge £1.00 and you leave a sensible margin. Profit = money in − money out.

Each price is cost, plus a slice of fixed costs, plus profit.

Reasoning it through: Sell 40 cups at £1.00 = £40.00 in. Money out = 40 × 30p ingredients (£12.00) + £5.00 table = £17.00. Profit on the day = £40.00 − £17.00 = £23.00. The £6.00 jug was a one-off start-up cost, so after day one it is already paid off and future fairs keep more.

Common mistake: pricing to beat a rival without checking your own costs. If a cup costs you 42.5p and you charge 40p "to be cheapest", every single sale loses you money — the more you sell, the more you lose.

Memory hook: a one-page plan answers five Ps — Problem, Person (customer), Price, Pay-out (costs), Profit. If you can fill those five, you have a plan.